WASHINGTON (AP) âÄî The head of battered insurance giant AIG told Congress on Wednesday that “we’ve heard the American people loudly and clearly” in their rage over executive bonuses and appealed to employees to voluntarily return at least half of the money. Testifying under oath at a congressional hearing as intense as any in recent memory, Edward Liddy said that some workers already have stepped forward to give money back. The company became the target of a political firestorm after the disclosure over the weekend that it had paid $165 million in “retention bonuses” to its employees at the same time it was accepting bailout funds from U.S. taxpayers. Some of the payments were made to the same traders and executives whose risky financial behavior caused the company’s near collapse. Liddy took the hot seat as President Barack Obama said he wants legislation to give the federal government vast new powers over financial institutions like failed AIG to protect the public. Obama, speaking to reporters at the White House, said the new powers he is seeking would be similar to those now exercised over banks by the Federal Deposit Insurance Corporation. It would be part of the administration’s broader package of new finance regulatory steps, he said. Since AIG is an insurance company and not a bank, it is not subject to the same oversight. “We’ve got a big mess that we’re having to clean up,” the president said. “Nobody here drafted those contracts” that resulted in the bonuses being paid out to AIG employees over the weekend, he added. Obama also defended his administration âÄî and specifically Treasury Secretary Timothy Geithner âÄî against questions about how it has handled the AIG fiasco. “Nobody here was responsible for supervising AIG and allowing themselves to put the economy at risk by some of the outrageous behavior that they were engaged in,” Obama said. “We are responsible, though,” he added. “The buck stops with me. And my goal is to make sure that we never put ourselves in this kind of position again,” the president said. Liddy told a House Financial Services subcommittee that, while the bonuses were a legal obligation of the company that is now 80 percent owned by the federal government, he had “asked those who have received retention payments in excess of $100,000 or more to return at least half of those payments. Some have already stepped up and returned” 100 percent. He provided no details. Responding to a question, Liddy also said the Federal Reserve knew in advance of the bonus payments and acquiesced in them. Fed Chairman Ben Bernanke has been publicly critical of the bonuses, as has Obama, Geithner, and congressional leaders from both parties. Despite Liddy’s announcement that employees were stepping forward to return bonus money, he ran into a wall of criticism from committee members. Rep. Barney Frank, D-Mass., chairman of the Financial Services Committee, demanded that the company submit to Congress a list “of people who received the bonuses, whether they paid them back or not.” If the names were not provided “without restriction,” Frank warned, he would ask the committee to vote to subpoena them. Liddy, while saying “we will obviously comply with the law,” told Frank he was “concerned about the safety of our people.” He said he would only give the names of the bonus recipients on the basis of confidentially. He read aloud threats that AIG employees had received, including one that suggested that all bonus recipients should be “executed with piano wire around their necks.” Another one read: “If the government can’t do this properly, we the people will take it in our own hands and see that justice is done. I’m looking for all the CEO’s names, kids, where they live, etc.” Frank said he would consult with security officials, but that his request for the names stands. For the American public, AIG now stands for “arrogance, incompetence and greed,” said Rep. Paul Hodes, D-N.H. Rep. Scott Garrett of New Jersey, the senior Republican on the subcommittee, complained that the administration still has no exit strategy for disentangling itself from the insurance giant. “Part of me wants to say to some of the loudest critics, ‘What did you expect and why weren’t you asking more questions before?’ I would argue that the real outrage now is the $170 billion of taxpayer money that’s been pumped into this company and to what effect,” he said. Rep. Gary Ackerman, D-N.Y., cited a “tidal wave of rage” throughout the country. Meanwhile, the agency that oversees AIG said that, while its criticism of the company’s practices had sharpened over the past five years, it failed to recognize the extent of the risk posed by the exotic financial instruments the insurance company offered, many of them tied to a housing market that had long been rising. Scott Polakoff, acting director of the Office of Thrift Supervision, said regulators failed to accurately predict what would happen to AIG’s so-called credit default swaps âÄî a form of insurance âÄî if housing values collapsed, as they have. “There are a lot of people walking around who failed to understand how bad the real estate market had gotten,” he said. AIG is under fire for $220 million in retention bonuses paid to employees in its troubled financial products division. The most recent payment of $165 million began to be paid last Friday. The retention payments âÄî ranging from $1,000 to nearly $6.5 million âÄî were put together in early 2008, long before then-Treasury Secretary Henry Paulson asked Liddy to take over the company. Liddy, the retired former chief of Allstate Insurance Co., himself is not getting a bonus and is only drawing $1 a year in salary. “No one knows better than I that AIG has been the recipient of generous amounts of governmental financial aid. We have been the beneficiary of the American people’s forbearance and patience,” he said. But he also said that “we have to continue managing our business as a business âÄî taking account of the cold realities of competition for customers, for revenues and for employees.” The clamor over compensation overshadowed AIG’s weekend disclosure that it used more than $90 billion in federal aid to pay out to foreign and domestic banks, including some that had multibillion-dollar U.S. government bailouts of their own. Orice Williams, director of financial markets and community investment at the Government Accountability Office, the government’s top watchdog agency, told the panel that the government’s intervention helped AIG avoid failure, but that the company is still struggling to pay back the money. Market and other conditions have prevented the insurer from making significant asset sales, she testified. She said most restructuring efforts are still under way.